Tuesday, December 15, 2009

Plainfield's City Council may be faced with pressure from the state to defer pension payments once again if a plan advancing in the Legislature goes into force (see the Courier here, and the Ledger here).

The move was made last year, and municipalities were virtually blackmailed into joining in by threats that needed extraordinary aid would be cut or denied altogether to towns that did not go along with the stopgap budgetary maneuver.

While the Council was disturbed at being forced to adopt the measure, since the deferred payments will have to be made later PLUS INTEREST, the Robinson-Briggs administration eagerly embraced the scheme as the way out of a budget mess that it had not addressed in a well-thought-out manner in its initial budget proposal (remember the $1M 'error'?).

Gannett's report includes this enticing little detail: When the repayment kicks in after a year or two, the interest cost to the municipality for the privilege of deferring the pension payments will be 65¢ on every dollar deferred.

Add to this the danger that the scheme could continue to weaken the pension plans holdings, eventually putting them in peril, and it is not hard to conclude that this is a BAD IDEA.

*IBG/YBG: "I'll be gone, you'll be gone", the philosophy of Wall Street dealmakers who sold high-risk financial products during the bubble, first noted in Jonathan Knee's 'The Accidental Investment Banker' (see a review here, more about the book here).

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comments:

I believe the answer would be a simple - " YES ". It amazes me the party for the people were the ones who forced this down everyone's throats and everyone accepted it. A pension plan that is for all sense and purpose designed for the "common man" who works for state government is on the brink of disaster and the elected officials working for the "common man" in NJ are still actively involved in screwing those very people. Although I blasted the mayor for doing it, I am smart enough to know who is responsible...HELLO JERRY!! ( the 3rd most powerful person in our legislature I might add )

Plainfield resident since 1983. Retired as the city's Public Information Officer in 2006; prior to that Community Programs Coordinator for the Plainfield Public Library. Founding member and past president of: Faith, Bricks & Mortar; Residents Supporting Victorian Plainfield; and PCO (the outreach nonprofit of Grace Episcopal Church). Supporter of the Library, Symphony and Historic Society as well as other community groups, and active in Democratic politics.